Elliot,
I did a weekly chart on a log scale of New D, and it is trading inside of a very compelling band that goes back a year and a half. We have seen this kind of idiot pricing in this stock before. Remember last spring, when the company came out with Q1 earnings that were a record for operating profit, but were lacking the tax kicker from the previous quarter, and the stock got knocked from about $14 back into the $9's? It was silly then, and it remains silly now. In fact, if you look back in time, this stock tends to get hit in March. The stock got hit in March of '94, '95, '96, and '97 (my chart did not show March of '93, but that was before the big fall). To me, it is just plain silly, again. Getting Oppenheimer on board has proven to be of minimal value, at least to date. I think New D has to loosen their lips a little, and get out there and get another big house to put out a strong recommendation on them. Given their proven growth track, their earnings multiple discount to their peers, and the accolades that their products receive, I would think an investment house would gladly put out a favorable recommendation on them, as they are not as risky as trying to figure out which internet stock is going to go from somebody's garage to being the next Netscape.
I have heard nothing about the first quarter. We do know that Eagle Eye just had a decent sale, and that we had the IRS and Australian sales (some of the Australian was in Q4 though, wasn't it?).
While I am frustrated at this time, I also know that since my first dip into this stock in December 1994, it goes through these strange periods where there is a lack of interest. Then, before you know it, they crank the stock up to the next level. It is these quiet times that provide GREAT entry points for people looking to get in. I was buying it at 5 when it had gone to sleep, and have not sold any for better than two years, and have no intention of selling any for at LEAST another year or two, and maybe never. This is a well run company, and it is not impossible to think that it could be part of my core holdings forever. As Nicole Schmidt of Oppenheimer aptly put it after the stock fell a couple of weeks ago, the story remains on track. And it is the story which compelled them to put a strong buy on the stock. And, as we have discussed before, it does in fact appear that Oppenheimer upped their one year target from $30 to $33, so they have boosted the target by 10%.
Hopefully Laurie Weller, in her new role as full time shareholder relations person, will get the analyst community more into this company. I have watched too, TOO many crap companies, with no earnings, and minimal growth get coverage by multiple analysts. It is nutty that we don't get more, so I believe that it will come. Ultimately, we SHOULD move to an earnings multiple that is more in line with our growth, and our peers. That would put the stock today out in the $35-40 range, based on trailing earnings.
Mike |
